I'm not an expert investor in banks. IMO, they are very tough to value. P/tangible-book might be the only measure that somewhat works, since earnings and cash flows for financials can be manufactured almost at will. Obviously even tangible book can be misrepresented too, so I did not say it was easy or reliable. :)
It might be possible to look at tangible book value growth as a metric. I've done this a bit with insurance companies, but not with banks. BMO, STT, NTRS, JPM show similar book-value-per-share annual growth ~9-12%. TD book value per share grew at 17% annually. C and BAC managed to destroy the book value so far. For comparison, Buffett's WFC grew it at 13% annually. (Note that I just quick calculated these, so they are book value per share growth, not tangible book value per share growth numbers)
With all this in mind, I'm still interested in JPM. I may buy more BAC and may be interested in C just because they seem cheap still. I looked briefly at TD and it looks too expensive for me. I have not done much analysis on BMO or Standard Chartered or STT or NTRS. STT and NTRS look expensive based on P/tangB, but this might be due to their fund administration business that deals with off balance sheet assets. |
